Sales Of New Homes Show Another Decline

WASHINGTON — Sales of new single-family homes dropped off by 13 percent in August, the fifth straight monthly decline, to 594,000 at an annual rate, the Commerce Department said Tuesday.

It was the sharpest month-to-month decline since January, 1982, when new home sales fell by 19 percent, and the slowest annual pace of sale since August, 1984, when the rate was 558,000, analysts with the department`s Census Bureau said.

The report followed a survey last week by the National Association of Realtors which charted a 7 percent gain in sales of existing homes to 3,690,000 at an annual rate, the swiftest pace of home resales since October, 1979.

Housing starts also gained ground in August, by a more modest 0.4 percent, to 1,822,000 annually, according to an earlier bureau report.

Yet another report released Tuesday by the Realtors showed a significant improvement in housing affordability conditions in August.

The index is based on the relationship between home prices, interest rates and family income. The median price of an existing home declined $300 to $80,000 in August while mortgage rates inched up to 10.27 percent from 10.26 percent.

Median family income rose from $28,590 to $28,712 during the period, industry analysts said.

At 104.1, the index means more than half of the nation`s families would qualify for a conventional loan on a median-priced home.

The median price of a new home was $91,400 in August, down sharply from $94,700 in July, the Commerce Department said.

The average price was $116,300, reflecting a significant proportion of expensive homes on the market.

Regionally, the decline in new home sales was steepest in the Midwest, where sales fell from 97,000 to 58,000 annually in August, the lowest level since August, 1983.

In the South, sales fell from 300,000 to 281,000, the slowest pace since August, 1984. Sales declined from 185,000 to 166,000 in the West and dropped from 104,000 to 89,000 in the Northeast.

There were 357,000 new homes on the market at the end of August, representing a supply of 7.3 months after seasonal adjustment, up from 6.2 months at the end of July.

The sharp monthly setback came as something of a surprise to analysts. Some said it was a temporary blip caused by uncertainty over the impact of tax reform on home ownership. Despite the monthly decline, sales for the year are still running higher than they have since 1978.

New home sales totaled 585,000 in the first eight months of 1986, up 11 percent from 484,000 during the 1985 period.

A key factor behind the generally brisk pace of new and existing home sales is low mortgage interest rates, which have fallen more than 5 percentage points since the peak levels of 1981 and 1982 to about 10 percent this year.